There were announcements in March this year that the UK government would extend the student loans system to postgrad students, with up to £10,000 available for Master’s students and £25,000 for PhDers. This was largely welcomed as recognition for the poor current levels of support available for postgraduate study. The precise details of how and to whom these loans will be made available is unclear. In one sense they’re desperately needed, but could this be an insufficient solution to the problem?
A very brief (recent) history of postgrad funding in the UK
Since the abolition of tuition and maintenance (living cost) grants in the 1990s, there was virtually no funding available for Master’s students. PhD funding was a little better in that there were/are scholarships from state and charitable sources, universities themselves, and industry. Whether there are enough of these is debatable, and the number of state-funded scholarships seems to have contracted over the last few years. Unless you have a very healthy savings account, generous parents, and/or a well-earning partner, the only other option would be to approach mainstream lenders for ‘career development’ loans. I doubt if banks would be keen on flexible repayment plans based on how much you might be earning in the same way that state student loans do. It’s also likely that they would see a PhD as a relatively risky proposition in terms of its ‘bankability’ because the financial returns are unclear.
(Postgrad) Degrees as Investments
The need for postgraduate degrees has increased, partly to train advanced workers to drive economic growth, and partly as a signal to employers. ‘Credential Inflation’ was a term that emerged in the 1970s, describing the phenomenon that the status of a qualification falls as it becomes more common. If a lot of people have the same certificate, it makes standing out from the crowd – being attractive to employers – more difficult. This is more of an issue now as student numbers have risen sharply over the past 15 years and show no signs of falling. We’re already seeing this to resulting in graduate un- and underemployment. One way to stand out is to take a more advanced degree than the majority. Of course this becomes an arms race, and they tend not to end well. Even now there seem to be more people with doctorates than (permanent) jobs for them. If the number of PhDs soared, the competition for jobs would be even tougher, and not having a job makes paying off the loan difficult.
The notion that degrees are investments in future earnings is the main argument behind loans/tuition fees. I’ve written about this thorny issue before. I’ll leave the extensive social returns from degrees to one side here, and just look at the financial aspect. The numbers for undergraduate degrees mostly add up for the time being: it is, on average, ‘worth it’ to pay the current rate of £9,000 tuition fees plus living costs. But if you already have loans of £45,000 (the estimated total debt after a three-year degree), and then add another £35,000 from a Master’s and a PhD, do the numbers still add up? If you progressed straight through the degree system right up to PhD and took all the loans available, you’d be £90,000 in debt, at the age of about 25. Post-PhD earnings tend to start at about £30-35,000, which compares to the average of £22,000 for Bachelor holders. This might make people err towards subjects with clearer/more lucrative career options such as finance or engineering, at the cost of other subjects. That’s fine if you’re good at (and like) finance and engineering, less so if you’re not (and don’t). Establishing the personal returns to justify a student loan is hideously complex and nobody has worked through the numbers of the postgrad salaries yet, perhaps because loans weren’t on the agenda before. ‘Ninety Grand’ seems like a frightening sum of money, even if repayments vary depending on your income and can be spread over a long period of time, paused, or eventually written off.
One possible argument for increasing the loans available to postgraduate students is that it will provide more opportunities for people from disadvantaged backgrounds. People from low-income groups are underrepresented in higher education for a range of reasons but there is little indication of the situation at postgraduate level. (A friend of mine is working on a project that’s been looking at this, and I think some of the findings are due out soon.) The Russell Group – the club of ‘elitest’ universities in the UK – said last year that they didn’t think loans for postgrads would help widen participation. We already know that people from poorer backgrounds are more averse to borrowing money; that £90,000 figure is probably petrifying to most people, let alone someone whose parents earn less than a third of that a year in total. There’s also an argument that giving loans helps the more affluent get further ahead, as they’re more likely to be at university in the first place, at least partially supported by their parents, and less afraid of debt.
Will £10,000 and £25,000 be enough?
Tuition fees for postgrad degrees in the UK vary widely. There is a cap on undergraduate tuition of £9,000, but no such limit on postgrad funding. Generally, it is cheaper to study for a Master’s or PhD, though – around £4,000-5,000 a year, but an MBA at Oxford will set you back a shade under £48K. If that doesn’t frame a degree as an investment, nothing does!!
Generally speaking, for Master’s degree students, if they have no savings – and as I mentioned earlier, there are virtually no scholarships – £10,000 will generally cover tuition fees and leave some money towards living expenses. If you have a family and are the primary earner, it’ll fall woefully short, even if you do work part-time. One of the few details on this new scheme was that Master’s loans would only be available to those aged 30 and under. This obviously discriminates against mature students, a group whose participation at university plummeted when fees were raised. This could present a major problem in the social sciences and humanities, where a lot of students have a gap of several years between under- and postgrad study; it’s quite rare to see this in science/engineering, on the other hand.
For PhD students, these loans could supplement scholarships nicely. These pay for tuition fees and a stipend of about £1100 a month. This is possibly okay if you’re single and renting a house/flat with others, but otherwise not. Again, the system seems to assume that PhD students are in their early 20s and don’t have families, and it’s not clear if the doctoral loans are also limited to certain age groups. Again, you can earn on the side but working too many extra hours can get in the way of completing your PhD on time; universities want/need you to submit promptly as they get in trouble from funders if you don’t. If you have a PhD scholarship, you’re generally funded for three years and have another year within which you have to submit the thesis. How you survive that fourth year is your own problem; I was working full time and it was brutal. For those without scholarships, I’m not sure if £25,000 would be enough unless they did a lot of work on the side, and this would slow them down.
The Jury’s out
The details on exactly what will be available – and under what conditions – remain to be seen. There was a mention of these loans being ‘income contingent’, and I can only assume that this means based on parental income. The financial apron strings must be cut at some stage, and that’s more likely to have happened as you get older. This income contingency might make sense for those recently out of school, perhaps, but if you’re 30, 40, or 50, your parents’ income is surely irrelevant!
This may have been a crowd-pleaser announced in the run-up to the election; if the current government fails to get re-elected, then this might fall by the wayside completely. Introducing loans for postgraduate study is better than the current situation, which is admittedly dire. But whether it goes far enough is another matter. These schemes may not encourage wider participation in postgrad study, be enough to get you to the end of a PhD, be available to those over the age of 30, or to those with affluent parents. Hmm.